shorters, page-5

RAMEEZ,
Sounds like you and Richard Goyder are 'singing from the same hymnsheet.' AAP summarised a speech he gave yesterday as being about how 'Coles will continue to provide Wesfarmers Ltd with opportunities for growth while the conglomerate looks to lift its return to shareholders,' and noted 'In Wesfarmers' full-year profit results for the 2010 financial year released in August, earnings from Coles rose 15.8 per cent in the year.'

Relevant quotes from Goyder and the AAP article:

> "This business has opportunities for growth for years and years. That is a great place to be in as a CEO in having businesses in your group with growth prospects for a long way forward. [Coles] was a business in our view that had enormous opportunities for growth."

> Despite the strong performance on Wesfarmers, Mr Goyder said shareholders were not receiving as good a return on their investment as they could. "Our return on equity, return on capital is not good enough. It is not nearly good enough. And to me that is a wonderful opportunity to increase it over the coming years."

> Mr Goyder acknowledged the Coles supermarket chain had strong competition from Woolworths. "I hold it in the highest regard as a company and as a competitor. We know in Coles we have a long, long way to go to get anything like the returns Woolworths have provided for its shareholders."

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WES' high P/E (compared to WOW) probably reflects its greater growth opportunities, and some market confidence that WES will improve its ROC up towards that of WOW. Imagine if WES could get ALL its retail businesses to the 30% that Bunnings achieves regularly...

Then again, WOW is focused on a growth opportunity of attacking Bunnings from a zero base! Suicidal, if you ask me, but only time will tell!